Articles in Category: Ferrous Metals

U.S. builders cut their spending on construction projects in September, the second straight monthly decline. Much of the decrease came as government spending for schools, sewers and transportation infrastructure projects tumbled. Our Construction MMI increased a point even as contractors cut spending.

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This was part of a yearlong decline as infrastructure funding has become a key policy issue in the presidential election.

Construction_Chart_November_2016_FNL

The Commerce Department said Tuesday that total construction spending fell 0.7% in September to a seasonally adjusted annual rate of $1.15 trillion. Publicly-funded construction dropped 0.9% to an annual rate of $270.3 billion. Over the past 12 months, government construction has slumped 7.8% — a decline equal to nearly $23 billion. It’s been a bad year for government infrastructure spending.

Federal government construction spending tumbled 1.9% after surging 4.8% in August.

Despite interest rates near historic lows, making it cheaper for the government to borrow and investment in facilities, the outlook for infrastructure spending has deteriorated. Next week’s Presidential election will likely clear up the short-term future of government infrastructure spending.

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Both Hillary Clinton and Donald Trump have pledged to revive infrastructure funding if elected. By reforming the business tax code, Clinton would provide an additional $250 billion in direct funding over five years and found a new infrastructure bank with $25 billion. Trump would rely on new tax credits for infrastructure, with the campaign projecting an additional $1 trillion being spent over 10 years.

Both would face the difficult task of shepherding their infrastructure spending ideas through what could be an adversarial congress.

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The development of natural gas and hydrogren technologies is a focus of research at Voestalpine AG‘s new DRI hot-briquetted iron ore facility near Corpus Christi, Texas.

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“We are hoping to run blast furnaces with hydrogen instead of coal and coke,” said Dr. Wolfgang Eder, Voestalpine’s chairman and CEO. “Development of such technology will take a 20-30-year time frame, but I am convinced we’ll hit that target.”

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This blurry “art shot” of Voestalpine’s 450-foot HBI production facility signifies that this will be a “think piece” about research, smog and environmental sustainability. Or Jeff took this from the bus. Jeff seriously took this from the bus. Source: Jeff Yoders

Natural Gas and Natural Hydrogen

This isn’t the first time we’ve heard about the potential of converting natural gas (the fuel material for Voestalpine’s iron ore reduction tower) to hydrogen to decarbonize dirty production processes. Voestalpine’s head and environmental heart certainly seem like they’re in the right place, but what might be advantageous, for the U.S. and South Texas, is the jobs that that research will bring. Read more

The tight oil and natural gas story here in the U.S. is often framed as a struggle between environmentalists who want to keep it — and other fossil fuels such as tight oil — in the ground, and drilling and exploration companies who want to sell it as a home heating and transportation fuel that at least burns cleaner than coal.

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What’s often left out of the discussion is the advantages gas can provide for plants, factories and other major industrial users that have nothing to do with the light switches in your house or apartment.

Voestalpine's reducing tower

Voestalpine’s 450-foot-high direct reducing tower near Corpus Christi, Texas, takes iron ore pellets and reduces them to 91% iron briquettes. Customers include steel suppliers for BMW and Mercedes-Benz. Source: Jeff Yoders

Austria in Texas

Last week, I toured Austrian specialty steelmaker Voestalpine AG‘s new $1.4 billion, direct-reduction hot-briquetted iron (HBI) production facility near Corpus Christi, Texas. It’s estimated that company’s investment will generate an estimated $600 million over the next decade and the new facility has already added 190 jobs to the local economy.

HBI, or sponge iron is a pre-material used in steel production. The new Texas facility takes iron ore pellets that are roughly 60% iron and reduces them down to HBI that is 91% iron. They use a high-temperature, natural-gas fueled furnace tower, now the tallest building in South Texas at 450 feet, to “reduce” oxygen and other impurities out. Read more

This summer, the price arbitrage between U.S. and international steel prices was huge. Well above historical levels. Two months ago we predicted that this unprecedented price arbitrage wouldn’t last, since enough holes existed in the anti-dumping duties to allow material to reach U.S. shores.

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That’s exactly where we are right now. The price spread between Chinese and U.S. steel prices has fallen to normal levels. Prices in the U.S. have corrected while prices in China are holding well.

HRC Prices

In the case of hot-rolled coil, the spread was never that wide since China was never a major exporter of HRC products into the U.S., so prices didn’t surge as much as with CRC, in which the U.S. imposed a super-high dumping margin on China.

Spread HRC US - HRC China. Source: MetalMiner Index

The spread between HRC U.S. and HRC China. Source: MetalMiner IndX.

After the big slump in prices over the past two months, the spread is now below $150/st. So HRC prices in the U.S. don’t look too expensive compared to China’s anymore. Read more

GE’s energy unit agreed to merge with Baker Hughes today and Rio Tinto has given up on its long-stalled Guinean iron ore project.

GE and Baker Hughes Agree to Merge

The oil and gas business of General Electric will be merged into Baker Hughes to create an oil field technology company that boasts more than $32 billion in combined revenue and operates in more than 120 countries, the companies said Monday.

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GE will contribute its oil-and-gas business and $7.4 billion through a special one-time cash dividend of $17.50 for each Baker Hughes share. The new company will be publicly traded on the New York Stock Exchange and will be 62.5% owned by GE and 37.5% owned by Baker Hughes shareholders if it passes regulatory scrutiny.

Rio Tinto Will Quit Guinea Iron Ore Project

Rio Tinto has signed a preliminary deal to sell its stake in Guinea’s Simandou project to Chinalco, it said on Friday, injecting impetus into the long-stalled plan to develop the world’s largest untapped iron ore reserves.

Free Download: The October 2016 MMI Report

For all the project’s potential, mining company Rio has voiced frustration over the difficulty of drumming up financing and industry sources said the agreement could open the door to Chinese funding.

Back pedal 12 months and the commodities landscape looked rather different.

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Prices had been falling since 2011 and the trend carried through into early 2016. Many worried that the declines were set to continue through this year. 10 months in, the picture looks brighter: Chinese demand for metals has picked up and cost-cutting by producers has boosted profitability.

Commodities Are Up… But Why?

The S&P GSCI Commodities Index has risen from a low of 271.8 in late January to 372.4 today, a rise of 37%, aided by a doubling in oil prices during the period. Mining stocks are among the better-performing asset classes of 2016 and were doing well even before Brexit boosted the fortunes of London-listed stocks. There is a sense of cautious optimism about a recovery in commodities much of which has to do with improved sentiment toward China. Read more

Allegheny Technologies, Inc. shares tumbled 15% Tuesday after the Pittsburgh-based specialty metals producer reported a larger than expected third quarter loss and missed analyst revenue estimates as well.

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The company lost $530.8 million, or $4.95 per share, vs. a loss of $144.6 million, or $1.35 per share, in the year-ago quarter. Sales fell 7% to $770.5 million. Analysts had expected the company to report an adjusted loss of 10 cents per share and revenue of $822 million.

ATI also announced the permanent closing of the idled Midland stainless steel melt shop and finishing operation in Beaver County, Pa.

It also permanently closed its Bagdad plant in Gilpin, Pa., whichemployed about 225 people. It produced grain-oriented electrical steel prior to the start of the six-month lockout of union workers in August 2015. Midland employed around 250 workers.

“The decision helps provide clarity to some of the people who had hoped that there would be a restart,” ATI spokesman Dan Greenfield said.

In December, the company announced it was mothballing both facilities with the possibility that they would reopen if market conditions for those products improved.

Free Download: The October 2016 MMI Report

Richard Harshman, ATI’s chief executive officer, said that has not happened. He announced the move as part of the company’s third-quarter earnings statement.

The Department of Commerce made, yesterday, affirmative final determinations in the anti-dumping investigations of imports of circular welded carbon-quality steel pipe from Pakistan, Oman, the United Arab Emirates, and Vietnam, and the countervailing duties investigation of imports of the same merchandise from Pakistan.

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The investigations covered welded carbon-quality steel pipe and tube, of circular cross-section, with an outside diameter not more than 16 inches, regardless of wall thickness, surface finish, end finish, or industry specification.

The products are generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe and are intended for the low-pressure conveyance of water, steam, natural gas, air and other liquids and gases in plumbing and heating systems, air conditioning units, and automatic sprinkler systems. The products may also be used for light load-bearing and mechanical applications, such as for fence tubing.

Free Download: The October 2016 MMI Report

Commerce determined that imports of circular welded carbon-quality steel pipe from Pakistan, Oman, the United Arab Emirates, and Vietnam have been sold in the U.S. at dumping margins of 11.80%, 7.24%, 5.58% to 6.43%, and 0.00% to 113.18%, respectively. Commerce also determined that imports of circular welded carbon-quality steel pipe from Pakistan received countervailable subsidies of 64.81%.

In its last report, Baosteel said profits had doubled while Newmont Mining, apparently, is still interested in its Indonesian copper assets.

Baosteel Profit

Baoshan Iron & Steel Co. Ltd. (Baosteel), China’s biggest listed steelmaker, reported its nine-month net profit more than doubled as an oversupply in the sector showed signs of improving due to capacity cuts.

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Net profit at Baosteel, a bellwether of China’s steel firms rose 148.3% to 5.6 billion yuan ($827.06 million) in January to September from a year earlier, it said on Monday.

Newmont Asks Indonesia for Permit Renewal

Indonesia is reviewing a request by the local unit of Newmont Mining Corp. to renew its permit to export copper and gold concentrate, a mining ministry official said on Tuesday.

The ministry is considering Newmont’s request for the permit, which would run through to Jan. 11, 2017, Coal and Minerals Director General Bambang Gatot told reporters.

The Commerce Department has placed anti-dumping and countervailing duties on mechanical drive parts from Canada and China, some as high as 400% for the latter. U.S. auto sales are forecast to fall this month.

The Auto Sales Plateau Begins to Slope

U.S. auto sales are forecast to drop more than 7% in October from the same period in 2015, the sixth monthly decline so far this year, as automakers offer steep discounts and adjust production to manage inventories, J.D. Power and LMC Automotive said on Friday.

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This may be the fall from the plateau we have seen over the last few months of flat auto sales.

The two auto industry consultants said October U.S. new vehicle sales will number 1.347 million, down 7.3% from 1.453 million units a year earlier. The seasonally adjusted annualized rate for October will be 17.7 million vehicles, down from 18.1 million on the same basis a year earlier. This October has two fewer auto sales days than October of 2015. Read more